How It Works
The first step in a Chapter 7 bankruptcy is the debtor files a bankruptcy petition. In addition the debtor must file schedules of assets and liabilities; schedules involving monthly income and expenditures made by the debtor; a statement of financial affairs pursuant to the bankruptcy code and a schedule of unexpired contracts and leases. Prior to the filing of the bankruptcy individuals who want to file bankruptcy must file a certificate of credit counseling from an accredited credit counselor.
A husband and wife can file a joint petition for bankruptcy. However, if a husband or a wife wants to file bankruptcy the other individual does not need to file bankruptcy.
The Meeting of the Creditors
Approximately 2 to 4 weeks after the filing of a bankruptcy a Trustee will hold a creditors meeting. During this creditors meeting the Trustee will question the individual or individuals filing bankruptcy and ask questions about their current financial situation. When husbands and wives file bankruptcy together, they both may be questioned by the trustee. For most individuals who file bankruptcy these questions by the Trustee will take between 5 and 10 minutes and will not be very painful.
Discharge of the Individuals Debts
At the end of the bankruptcy, the bankruptcy court will mail a copy of an Order of Discharge to all creditors as well as the attorney for the debtor. The discharge advises the creditors the debts owed to these creditors have been cancelled and no further collection activity with regard to these debts can take place.
The Means Test
In 2005 there was an amendment to the bankruptcy code. This amendment included something called the “means test”. The means test creates a median family income for households. Individuals and families whose financial situations exceed the means test no longer can qualify to file a Chapter 7 bankruptcy, but they can still file a Chapter 13 bankruptcy.
Elliot S. Schlissel, Esq. has been practicing bankruptcy law for over 35 years. He is the managing partner of Schlissel DeCorpo LLP. The law firm represents debtors in foreclosure defense and helps debtors file bankruptcy cases and obtain mortgage modifications. They can be reached for a free consultation at 800-344-6431 or by e-mail at Elliot@sdnylaw.com.